A group of investors is raising money to bail out RAIT Financial Trust, a commercial real-estate investment trust headed to a bankruptcy auction, WSJ Pro Bankruptcy reported. Once known as Taberna Funding, RAIT Financial filed for chapter 11 protection in August touting an offer for its office property assets from Fortress Investment Group LLC that would deliver more than $174 million to creditors. That offer is due to be tested at an auction, if competing bidders step forward. On Monday, a committee of preferred shareholders filed court papers advancing a competing restructuring strategy based on a $50 million infusion of cash. Preferred shareholders Ramat Securities Ltd. and Kenneth Grossman are leading a group of nine hedge funds, family trusts and individuals that argued that the sale to Fortress is good for Fortress, but bad for RAIT and its creditors. The shareholders are proposing to reorganize the business instead of selling it. Based in Philadelphia, RAIT Financial filed for chapter 11 bankruptcy protection owing about $160 million in debt. RAIT’s chapter 11 plan said its sale to Fortress would go a long way toward paying down bond debt, compensating senior creditors in full while junior bondholders would get from 46 cents on the dollar to 77 cents on the dollar.
